Kohl’s Corp. KSS 1.61% said it would start paying a dividend and buying back shares again after a group of activist investors pushed to take control of the company’s board.
The department-store chain on Tuesday said its board approved a cash payout last month of 25 cents a share. For its new fiscal year, the company said it plans to spend at least $200 million on stock buybacks.
Kohl’s moved to conserve cash when the Covid-19 pandemic was first intensifying in 2020. The company, like other retailers that weren’t considered essential businesses, temporarily closed down its stores last year.
Kohl’s is facing pressure from a group of shareholders that includes Macellum Advisors GP LLC, Ancora Holdings Inc. and Legion Partners Asset Management LLC, as well as 4010 Capital LLC, The Wall Street Journal reported in February. Those investors had built a 9.5% combined stake in the company and nominated nine people to the company’s 12-person board, the Journal said.
CEO Michelle Gass said she had been having constructive conversations with the activists, but differed with them on their desire for Kohl’s to sell real estate and lease it back.
Photo: Sarah Silbiger/Bloomberg News
They want the company to add directors with retail experience, consider a sale-leaseback of some of its real-estate holdings and reduce inventories, among other changes.
Kohl’s has said it was already pursuing several of those initiatives and had concluded that others wouldn’t add value. The company also has said it has added six new independent directors since 2016.
Menomonee Falls, Wis.-based Kohl’s on Tuesday reported sales fell to $5.88 billion for its fiscal fourth quarter ended Jan. 30 from $6.54 billion for the year-earlier period. Sales for the latest period were in line with the consensus estimate from FactSet.
The company said net income increased to $343 million, from $265 million a year earlier. Earnings per share rose to $2.20 from $1.72.
Lower costs, including for selling, general and administrative expenses, helped results as did a tax benefit. The company’s adjusted profit of $2.22 a share surpassed expectations from analysts, according to FactSet.
In addition to restarting dividend payments and stock buybacks, Kohl’s said it plans at least $550 million in capital expenditures during its new fiscal year, funds that will help pay for a partnership with Sephora and for the opening its sixth e-commerce fulfillment center.
In March of last year, the company said it would lower capital investments and temporarily suspend share repurchases. Kohl’s suspended dividend payments beginning in its second quarter of last year, the company said in May.
Write to Suzanne Kapner at [email protected] and Micah Maidenberg at [email protected]
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